There are many ways to invest successfully. I have friends who are very successful value investors. Most of their returns are earned through capital appreciation. They spend a great deal of time poring through 10-Ks and 10-Qs of companies off the beaten path. The potential returns are high, but so is the effort put in their craft.
At the other extreme there are successful traders. They look at their charts to determine entry and exit points for the day's transactions. Little time is spent analyzing the underlying fundamentals of the company since it likely will only be held for a very short period of time.
I would put investors in dividend growth stocks somewhere between these two, but much closer to the pure value investor. Like the value investors, our time frame is long term. Although we carefully research potential companies, our emphasis leans more toward fundamental metrics needed to sustain annual dividend growth, with less emphasis on current value.
There are successful investors in each of the above groups and they share a common trait. This trait is found in almost all successful people — it is their secret to success. Fortunately, this trait can be learned and mastered.
The secret to successful investing is... discipline.
A person that moves from one investment strategy to another lacks the discipline to be successful. Very few people are born with the raw intellect that allows them to just pick winning stocks out of the air.
For the rest of us, we have to rely on our discipline to do what's necessary to identify stocks that will provide us with our best opportunity to succeed, and we have to remain focused on quality over the long-term. Our portfolios include stocks like:
Abbott Laboratories (ABT) | Yield: 3.7%
Abbott Laboratories is a diversified life science company and is a leading maker of drugs, nutritional products, diabetes monitoring devices, and diagnostics. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 39 consecutive years.
Emerson Electric Co. (EMR ) | Yield: 3.3%
Emerson Electric Co. designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial, and consumer markets around the world. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 55 consecutive years.
Johnson & Johnson (JNJ) | Yield: 3.6%
Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 49 consecutive years.
The Coca-Cola Company (KO) | Yield: 2.9%
The Coca-Cola Company (KO) is the world's largest soft drink company with a sizable fruit juice business. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 49 consecutive years.
McDonald's Corporation (MCD) | Yield: 2.9%
McDonald's Corporation is the largest fast-food restaurant company in the world, with about 32,900 restaurants in 117 countries. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 35 consecutive years.
The Procter & Gamble Company (PG) | Yield: 3.3%
The Procter & Gamble Company is a leading consumer products company that markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 35 consecutive years.
Walmart Stores Inc. (WMT) | Yield: 2.8%
Walmart Stores Inc. is the largest retailer in North America and operates a chain of discount department stores, wholesale clubs, and combination discount stores and supermarkets. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 37 consecutive years.
Obviously, we must do our due diligence to determine an appropriate entry point for any stock purchased. It is important to remember that the process does not stop there. We must also monitor our holdings to ensure they remain solid investments that will provide us a rising income in the future.
Full Disclosure: Long ABT, EMR, JNJ, KO, MCD, PG, WMT. See a list of all my dividend growth holdings here.
- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
- 5 Dividend Stocks In Need Of A Market Correction
- My Top And Bottom Performing Dividend Growth Stocks
- How To Build A Sustainable High Yield Portfolio
- 10 Stocks That Have Paid Dividends Since The 1800s
- High Yield Dividend Stocks in Gurus' Portfolio
- Top dividend stocks of Warren Buffett
- Top dividend stocks of George Soros
About the author: